Storebrand, the Norwegian group that manages more than NOK780bn (€77bn), has announced that its Swedish subidiary SPP is to make all its funds fossil free - an action that will help make about a third of the group's total AUM fossil free, or €26bn out of the €77bn (NOK780bn) total group AUM.
Then announcement has come at a time when the Conference Of the Parties (COP) 25 has been taking place in Madrid, with so far mixed results in terms of expectations for commitments that poorer countries are seeking from richer countries to address commitments made in the Paris Agreement to combat climate change.
Storebrand notes that the UN Environment Programme has reported a 2% rise in global climate emissions in 2018 alone, against estimates that global emissions cuts of 7.6% annually will be required from 2020 on in order to limit global warming to 1.5 degrees Centigrade.
Storebrand Asset |Management launched its first fossil free fund in 2015 - others have followed (https://www.investmenteurope.net/investmenteurope/news/3718175/fossil-free-fund-range-takes-85-aum-%E2%80%93-storebrand ).
Odd Arild Grefstad, CEO of Storebrand Group, said: "The growth in our fossil free funds is a result of strong customer demand and an increased allocation to fossil free solutions in our captive life insurance portfolios. Fossil free funds were initially niche, but has grown to become an important building block in the sustainable investment strategy for many clients."
"There is a rising global demand for action on climate change. Countries, municipalities and cities are increasingly asking for different investment solutions to align their capital with their overall climate commitments."
Grefstad added that institutional investors are to date the largest group of investors in fossil free funds and the demand has been strongest in the Swedish market so far, but that there is increased interest across Europe.
Åsa Wallenberg, chief executive of SPP Fonder in Sweden, which has assets of some SEK230bn (€21.8bn) says that the issue of climate change is one of existential risk, and that the financial sector has a key role to play in meeting the Paris Agreement targets.
"As investors, we will contribute in the way we can. Right now we are in a totally unsustainable equation, where the gap between global plans to finance fossil businesses and the climate plans that the world's leaders agreed in Paris in 2015, is increasing."
"We must recognise that not all companies will be part of the future. Therefore, we should back companies that can change their operations and have the opportunity to be part of a profitable sustainable economy, allocating capital to them and challenging industries that are not compatible with the global climate ambitions."
"Working through active ownership and driving developments in sectors is a very important aspect of sustainability work, which requires patience. Changes take time. In Sweden we have a customer group that does not really have that patience. Many of our customers additionally have well devleoped climate plans and have written in investment mandates what they can be invested in. For them we want to provide climate-smart future products"
"Carbon emissions will presumably be taxed ever harder going forward, a risk that the finance industry generally has perhaps not fully priced. The European Investment Bank's latest decision to stop financing fossil businesses also suggests that the steps we are taking now are correct."
Storebrand has, along with 15 other asset owners, joined the Net-Zero Asset Owner Alliance. The members of the alliance are committing to a net-zero investment portfolio by 2050.